I stated that customer satisfaction is the responsibility of EVERYONE!

Everyone “touches “  the customer and how everyone performs their job relates to the customer being satisfied.  I also listed several steps for starting a customer satisfaction program within any company. Lastly, Marketing should always look at their activities from the customer’s “glasses.”

Several people asked about research on customer satisfaction and activities that a company can perform and linking it to either starting a customer satisfaction program or improving their current customer satisfaction program.   Well the answer is a definite YES!

There are a number of approaches, companies and experts on this subject, but they basically boil down to a relatively small number of activities that help improve customer satisfaction.

Fundamentally, customers (both B2B and B2C) are looking for value (see my posting on good value propositions) and value is benefit minus cost.    Given this basic premise, one can link activities that focus on benefits and cost, and if one improves on these activities it will result in an improvement in customer satisfaction and in most cases have a positive impact on the company’s revenue stream.

Two examples of this relationship are:  One, developing a quality product that addresses a customer’s critical issues, resulting in a perceived benefit and subsequent purchases of that product or service. (e.g. disposable diapers)  Secondly, by developing a great relationship with the customer base or creating a wonderful image of your company that will be viewed as a benefit to the customer and again resulting in a purchase of the product or service. (e.g., Apple, Disney)

Bradley T. Gale’s book titled “Managing Customer Value” talks about developing a matrix of attributes related to customer satisfaction consisting of “levers” that when improved will result in an increase to the benefit attribute or when levers addressing costs are improved will also increase the overall value and thus the potential for increased revenues.   The key point is incremental or small improvements in some or all of these attributes have a multiplying impact on the revenue improvement factor.    So just a 1-5% improvement in several areas can result in increased revenues.  

So, as I stated before, everyone can impact customer satisfaction and there are metrics that can be put in place that do not require a major undertaking to measure overall customer satisfaction AND increased revenues. 

Have you stated your customer satisfaction program; if not why not?

RHL 8/16/11

Last week my barber gave me a first hand lesson in how confidence impacts the economy.  As I usually do, I asked when I got in the chair, “How’s business?”  His response was that it was down.  “How could that be?” I asked, “Everyone needs a haircut.”  His response captured the confidence problem that is sweeping the country. 

“Assume 1,000 customers,” he said, “who usually get their haircut every four weeks, but because of their confidence in how things are going, they decide to put off their haircut by one week.  What does that do?”  I did some quick math.  If a person gets a hair cut every four weeks, that is 13 haircuts a year (52/4 =13).  If he does it every five weeks, that is 10.4 haircuts a year (52/5 =10.4). The result is a 20% drop in business (10.4/13 = .8).  Assuming an average bill of $16.00 (not counting any tip), a 20% decline in the number of haircuts translates to a $41,600 revenue decline.  Tony’s business is not off 20%, but the point was made.

So, because some of his customers are unsure where the economy is going, and feel that it may be best to economize, they are cutting back a little.  This has ripple effects through-out the economy.  Tony and Jim probably won’t take the boat or RV trip they thought about in the spring.  Their purchase of supplies is down. And their fixed costs are edging up.  To offset this they are now open to 7:00 PM on Thursday, and have kept their prices stable for over a year.

The lesson learned from this is that how the decision maker feels about the economy is often the key to a purchase or not.  If he/she can feels that this is the time to hold back, due to a lack of confidence on where things are going, they will do so, whether it be a haircut, a new set of tires for the car, a new dress, or going out to eat.  If they are confident that things are going to be better, then they may be more likely to get their hair cut every 4 weeks.

This applies to those who control the purse strings in companies.  If they personally feel that the economy is trending down, they may re-think purchases and/or commitments.  Certainly Dick and I have seen this behavior in our consulting business.

The net of all these delayed haircuts is that the economy continues to settle to a new, lower equilibrium or steady state.  After all, men do have to get their haircut sometime, and tires and cars do wear out, and new capital equipment has to be purchased.  For the CMO, this means that his product or service has to be top of mind when the purchase decision is made.  And that the product/service sold surpasses the buyer’s expectations.

I will continue to go to Tony, as I have been going there for over a decade, and it is where I learn basic economics.  But I wonder how the other product/service providers are positioning themselves as their markets sort themselves out.

My advice to help turn the economy around…go get a haircut!

RHM  8/11/2011   

When customers look for value, it does not have to be just from the product or service but in how they are treated in the whole buying, selling and post sales process.

So who should own customer satisfaction?  Should sales own it? Should marketing own it? Should customer service own it?  Should the IT organization own it? Should your partners own it?

Let’s look at each group and see if they should be responsible for customer satisfaction.

Sales:  Well sales “touches” the customer every day, they are the ones who know what is going on with the customers.  So clearly it should be sales.

Marketing:  Marketing does the research on customer needs and pain points and develops the messages and branding that resonates with customers, so they should own customer satisfaction.

Customer Service:  Wait, this organization response to the customer’s requests. They handle the customer’s problem that no one else wants.  Clearly they should own customer satisfaction.

IT:  They are responsible for customer facing applications like call center answering systems, web site for users and order processing systems.  So, clearly they know the needs of the customer in order to make them satisfied.

Your Partners:  Hold the phones, most partners do some or all of the above functions so they really should own customer satisfaction.

Well, I would offer a different answer to the problem.  Customer satisfaction is the responsibility of EVERYONE in ANY company!

Everyone “touches “ the customer and how they perform their job relates to the customer being satisfied!   The developer of a product should develop something that addresses a customer need. The people in manufacturing should make sure that what is shipped is of highest quality and ship what the customer requested.  The call center person answering the phone should treat each phone call like it is the president of that company calling in. Sales and partners  should listen to their customers and address their needs and not selling them something they do not want. Marketing  should always  look at their activities from the customer’s  “glasses”.

So, what steps should you take to have all around customer satisfaction?    A customer satisfaction program does not have to be a very complex or a costly situation.  Here is a very basic form of a customer satisfaction program that one can get started quite easily and be effective.

Step One; Train each and every one within your organization on what customer satisfaction is and how every department has an impact on the results of good customer satisfaction.   Show them some case studies or examples of bad and good customer satisfaction situations.

Step Two, Create some posters or banners or have article about customer satisfaction in the company newsletter.  Have each group meetings or conference calls set aside a session about customer satisfaction.

Step Three, Have some one or small groups set up some goals and start collecting data on how the company is doing on creating good customer satisfaction on a regular basis.

Note:   There is actual real world data that shows that companies who have created some form of customer satisfaction program have not only improved customer opinions but have seen an uptick in net new revenues.

RHL 6/7/11

For the rest of you please read on.

In one of my postings titled Why Marketing Products and Services Are The Same, I discussed why, from a marketing point of view, products and services are the same.  I contend that the same is true about for profit and non-profit organizations.   As I always like to say, the recipe is the same but the ingredients are different. 

First of all, there are definitely some differences between for profit and non-profit. The major differences are:

1. From a legal/tax basis they are viewed and handled differently.
2. There are differences on how certain parts or groups within the organizations must behave and/or how they are governed. One example is how board members are organized and their compensation.
3. Probably the biggest difference is the money side.   How “revenues” are generated and what one can do with the “profits”.

Now why are for profit and non-profit the same from a marketing point of view?  Let’s look at the major marketing functions and see why.

Product or service research:  One must do a Marco/ micro segmentation for both for profit and non-profit to truly understand one’s targeted customers.  For a non-profit that has a single cause the audience will be very specific.  And, one must know the targeted customer’s”pain points” so you can develop the appropriate product /service/message to address the correct segment with your existing product/service/message.

Product or service introduction/offer:   What is the compelling offer today that would make your customer buy or donate?   You must provide all the necessary marketing support and collateral to address this.  Again, there is no real difference between for profit and non-profit.  The difference urging people to contribute to the Jimmy Fund today is not at all different from urging people to buy my software package.

Value:  In a guide that we offer titled, “How to Create a Value Proposition” the key point is do you have a value (Value= benefit- costs) that first, addresses a need, second is unique, third is compelling and fourth, is there value in the eyes of the potential customer?  I should stress even in non-profits, if you don’t articulate a value, why someone would donate to or join your organization.   What is that “ROI” from a customer’s perspective…understanding that it may be emotional and intangible vs. tangible?

Off/online Marketing:   Another point I always make is, it is not a question of which marketing tool to use BUT what is the appropriate mix!   If for example, a nonprofit is focused on the homeless, then there is a high probably that the homeless themselves will not have Internet access and thus blogging is not the answer, but it might be for the corporate sponsors that you have or are seeking.  To address the homeless, the marketing strategy might be to have posters at shelters, parks or other public places. Point is different media/methods for each audience.

Generating revenues:  Again, each type of organization needs revenue, be it from the sale of a product or service or a donation for a nonprofit.  These revenues come from some form of leads, which again must be generated using marketing tools that fit the firm/organization, aimed at keeping a funnel or pipeline full of prospects.

So, keep in mind whether it is for profit or non-profit, one still needs a strategy goals and a marketing plan to be successful.  The only difference is, the recipe is the same but the ingredients are different. 

RHL 5/27/11

Value propositions are very important to business because if they are done correctly they uniquely define something that a company offers to their customer that addresses their need(s).  Unfortunately many marketing people and some senior management people are so close to their products or services that they actually feel their value propositions are compelling and that their customers feel the same way too.  In reality, value propositions are usually vague, do not address the customer’s issues and if you close your eyes you cannot tell one vendors values from another.

So what are great value propositions?  Well first let’s define a value proposition and what its components.

Wikipedia’s “defines a value proposition is part of business strategy. A value proposition is based on a review and analysis of the benefits, costs and value that an organization can deliver to its customers, prospective customers, and other constituent groups within and outside the organization. It is also a positioning of value, where value= benefits- cost.”

Neil Rackham believes that a value proposition statement should consist of four main parts: capability, impact, proof, and cost.  I would add to this definition that it should have a differentiator

Investopedia states “a business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.”

Value propositions should address issues that are concerned with:

• Increasing revenues or market share
• Time to market
• Decreased costs
• Operational efficiency improvements
• Customer relationship improvements

Some examples of weak value propositions are the following:

            **We have experience

            **We improve your marketing

            **We offer training

            **My favorite, we are number one provider of XXXX (provider of what???)

Some examples of strong value propositions are:

**Our Automobiles will save you 20% on gas over all other cars

**Customer can save 65% with our home insurance versus any other insurance company

**Wal-Mart   “everyday low prices”

**BMW   “the ultimate driving machine”

Why are these good value propositions; because they address a customer segment needs, are compelling, and they definitely have value.

So ask yourself this, does your value proposition address what I call the customer’s pain points, are you resonating with them in the sense that you and your potential customers are talking about the same thing? 

Second, does the value proposition provide uniqueness/differentiation as compared to the competition?

Lastly, is there a real value (benefit minus cost) to the customer?

IF you cannot answer yes to all these questions, I would strongly suggest reconsidering both your messaging and value proposition statements

RHL
5/3/11

With the changing of the selling model to where the customer is in control; I contend that the old sales strategy of promising the world and getting the order no longer works.  Instead, I would suggest a different approach of under-promising and over-delivering. Let me give a few examples to support my hypothesis.

The wood man:  For those very cold nights in Maine we buy fire place wood from a local young man. The sales cycle goes something like this.  In the fall I get a call from the “wood man” and he asks if I need wood.  I say yes.   He asks, when do you want it? I say how about Friday or Saturday, he says; I will see what I can do. I ask what the price is and he says $170 for a cord of semi-seasoned wood.  I say okay.  Phone rings Thursday night and the wood man is calling to let me know he will be there first thing Friday morning. Early Friday morning a clean/neat trunk shows up filled above the side walls.

So how does this support my idea?  Well, the wood man’s price was not the lowest BUT, he communicated with me, there were no surprises, he delivered on time, was very professional, and I paid a good price for the value (he delivers more than the standard cord and it is all quality wood). He might be a small business, but the wood man does not promise or commit to every thing and he exceeded my expectations.  Will I order from him again, you betah!

New oil furnace: My neighbor recently had to buy a new furnace.  The furnace company explained in detail why he needed a new furnace, gave him three options he could pursue, with the pros and cons for each option.  They also gave him three customer references, an estimate of how long the project would take and of course three different prices.  Then a furnace “engineer” showed up and explained how the three options were different from an operational and efficiency point of view. Well the net was the furnace was installed in less than a day. All the other tasks that the buyer normally has to do (example, pull the permits) were done by the company. The company cleaned up everything in the basement (even areas that had nothing to do with the task).  A couple of related things from the old furnace system were upgraded AND the price still stayed the same.  Again, minimum promises and in this case far more was delivered then my neighbor had anticipated.

Travel management company:  Another neighbor has a time share that she has owned for years. Each year she and her husband “exchange” it for some other place around the world. The travel management company told her, exchange when ever and where ever, no time constraints, if you do nothing your time will automatically “banked”. Well two years ago, she received an email stating that her exchange could not be done because she was too late.  To make a long story short, the truth was that the management company made a mistake and had accidently exchanged her time share. But instead of admitting to a mistake, they dragged her on for months with mounting frustration. Finally after my neighbor hired a lawyer, the travel company miraculously found her a new exchange!   The result is that my neighbor has changed travel companies.  Reason, far too many promises and no delivery.

So if companies understand that the selling model has drastically changed and that customers are in the driver’s seat; then they must find different ways to get their order. Loyalty and customer satisfaction are two ways to retain and capture new customers. One strategy to accomplish these methods is to under promise and over deliver!  Now one might say this can be an expensive way to get the “order”.   I would argue first that getting back an existing customer that you have lost is extremely costly, and second that the perceived additional costs are actually less because you are also getting additional benefits in awareness, thought leadership and creditability; all of which are hard for your competitors to compete against.

Are your salespeople and your company still promising the moon in order to land the sale, or have you moved on to under promising and over delivering…and the resulting increase in sales and customer satisfaction?  Let me know.

RHL 11/09/10

1-      Give your sales force and or resellers that key compelling feature for your product or service that is being worked on in development. Something like, 100Million trillion bits per second with 1,000 priority channels. This will be enough for your sales team to sell to any potential customer. Forget that it does not address any customer application or there are no new benefits or value propositions to the customer.  These things are far overrated.

2-      Cut your web site activities to zero.  It is not true that customers are researching for products or services over the Internet and eliminating companies before they even contact you.  Your features (see above) are enough to get the orders.

3-      Stop having your Marketing resources track what is being said about your company and/ or products via social media like Facebook or twitter.   The chances that any portion of the 600 million plus social media users are critiquing your company and or products/services are highly unlikely.

4-      Eliminate all email campaigns and newsletters No-one really reads your emails to see what values you are providing or is interested in your thought leadership.

5-      Put on hold any product/service introductions, as no one is buying anything anyways (except from your competition). Just milk your core products until the economy gets better and in the mean time let your engineering team support sales.

If you do some or all of these suggestions I personally guarantee that your will be out of business within twelve months.

It has been proven time and time again that companies who increase their marketing activities during slower economic times come out ahead AND have increased in their market share.   The choice is yours, play it extremely safe and lose big time or embrace Marketing and win big time!

RHL 11/2/10

From a marketing point of view. service is a product.  As I always like to say, the receipt is the same but the ingredients are different.  Let me explain.

Let’s start with the “research” of the potential for offering of a product or service.  For both, one needs to understand the needs, the audience, the audience’s perceived values, what they might pay for the product or service. Some differences might be that a product has a finite speed where as a service is not so absolute and thus a service might be harder to quantify.  Usually a product has tangible features while a service has intangible features and thus slightly more challenging tasks for the marketer.

What is the offer, what are the product or service capabilities, what problem does it address, how this solution is better than the competition? Again products can usually be defined in specifics, where as services need more explanation.

A business case needs to be developed, in this case it might be units sold versus number of hours sold, but in either case there must be a forecast with related investments and profit targets.

Next, features and benefits: a product feature might be how fast it performs and the related benefit might be saving time and thus costs.  A service feature might be ease of installation, thus the benefit is saving time and also saving costs. The benefits of a product may be easier to measure than a service benefit, which might be more judgmental. In either case, like the offer itself, the marketer has to make the feature and benefits understandable to the potential buyer.

Value propositions: again, products and services all have value propositions. An example for a product is high reliability under stress, while a service example could be best practices for that industry. Probably the approach to creating the value propositions might be different.  For products, some innovative features or enhancement, while a service might be complete solutions (which might include products and services) to solving a business need.

Case studies or testimonials are needed in either case.  Buyers need to know that other buyers who have similar issues have used this product or service and have seen positive results.  A challenge here is subjective things like quality.  For a product an end user can test the product, as for a service this is more unquantifiable, but things like acceptance testing or a SLA (Service Level Agreement)  can start to address quality issues from a service point of view.

All types of collateral are needed to support a product or service.   How is your sales force or reseller going to promote your product without some supporting material?  Another challenge is demonstrating a service versus a product.  Another reason for testimonials or case studies.

Training is needed both for the internal and external audience.   Just like products, customers need to be trained on the installation, operation and maintenance of services (for those who select to do these functions themselves).

The key point is that products and services are the same from a marketing point of view.  Most marketers are experienced in marketing products and less with marketing services. The challenge is to define service attributes like products so that potential customers can understand the service and identify it with their needs or pain points.

Have you thought about marketing your services to add to your 2010/2011 revenue stream?

RHL 9/14/10

Well, nothing could be further from the truth.  Let me give two examples to prove that branding is not only important for image but in getting and keeping customers. But first a brief definition; branding is a sign, a symbol or a slogan that people identify and relate to a product or service.

Do you remember when Coke changed their name to New Coke? What a mess that was. Not only did people get confused, but some of their following started to try other soft drinks.  It did not take long for Coke to change their strategy and go back to what worked in the past.

A more recent massive mistake was when Tropicana changed their image on their orange juice cartoon.  For years, Tropicana had on its carton a big orange with a straw through it.  The new carton has half light green and white panels with the word Tropicana in script on the carton.  So when I was in the grocery store, like millions of others, I had orange juice on my list. When I got to the milk/juice section, I saw a new manufacturer of orange juice (my first reaction), then I thought, no it is a “knock off” on Tropicana. Then to my amazement, I realized, NO it is Tropicana. THEN, I thought who is in charge of marketing at Tropicana and what was going on in his/her head in making this critical change.  Well I did a little research and talked to others and it was unanimous, what was Tropicana thinking?

With today’s technologies, branding needs to be considered in many areas.  An enterprise’s web site needs to be consistent with its branding so that users “link” the web site with the physical enterprise and their products. The brand also needs to be unique so that the buyer will also associate your enterprise and their product with the product they are seeking to buy (Nike’s brand – the swoosh- is more identifiable then the name).

So don’t make the mistake and not develop a strategy for branding and don’t casually change your branding and assume it will not have any negative impact.

What is your brand strategy?  What stories do you have about Marketer’s branding blunders?

RHL 04/20/10

 1-     Understand the goals and go to market (GTM) strategy for the enterprise and /or the SBU (Strategic Business Unit).  Example: is it “price skimming” – entering the market with a high price with the intent to capture a piece of the market and drive revenues, or penetration, initially pricing low to gain volume/market share or attack the competition?

2-     What is the financial pricing philosophy?  Is it cost plus (internal costs plus some factor to get to a selling price) or is the objective to have a certain margin (price minus cost).  While I am not a fan of “cost plus” because it does not consider what I call the “surrounds” (buyers value, market advantages, competition, economic factors, etc.), it is critical to know ALL the costs that go into a product/service.  There are the fixed product costs (material, labor), possession costs (storage, transportation) and user costs (installation, training), as well as the variable costs (marketing, distribution, corporate overhead, etc.)

3-     What is the competitive situation?  Do your competitors have the equivalent product and equivalent features? While this is important, I feel what is more important is a view of the competitor.  What is the competitors’ goals and strategy, what is their GTM strategy, what do their financials look like? What market segments is the competitor focusing on?  How will the competition react to your product introduction? All of this can have a major impact on pricing your product.  An example would be, if the competitor has little margin, then pricing your product just below his could lead to capturing his market share. One last comment, whatever you do, do NOT get into a pricing war. These usually lead to both parties losing.

4-     As I have repeatedly stated before, know the customer (enterprise in this case). Is there a demand in the segment(s), and if so, the value(s) might be different for each segment.  Is there a major void with no current solution?  What value-added benefits might the enterprise see from this product introduction? The benefit can be a unique or new feature, it can come from an operational feature such as reliability or quality; it can be from a financial factor like total cost, or even from a buyer department guideline, i.e., providing minimum risks or outstanding support.  If an enterprise sees benefits and value (value is quality relative to some price), then your price can have a premium over the competition.

5-     Does the product or service have a unique feature that the competition does not have or the market does not know about yet? If so you have a price advantage!

6-     Is there a service that must be attached to the product?   A strategy might be to lower the product price and recoup profits from the service.  This is especially a good approach if you “control” the service and the enterprise sees value in the service.

 7-     What impact will this product introduction and its price have on your other products?  Will this new product’s price and features replace another one or negatively impact your current revenue stream?

8-     Channel considerations: who will sell the product?  If it is your own sales force, then you may have some margin movement.  If it is a reseller, they will usually want some form of discount from list, and thus the margin (therefore the price) has to be such that you and the reseller both make a profit.

9-     Legal consideration:  there are laws regarding price setting and discounting. For example the Robinson – Patman Act addresses unlawful price discrimination, requiring the seller to take into pricing into account when there will be multiple channels re-selling the product.

10- Lastly, once you have launched the product, monitor the situation in the field to see if adjustments need to be made.

 Like any guide there are risks in general statements, but the recipe is usually the same, it is the ingredients that vary. So adjust each step relative to your product. Start with a well thought out strategy, decide on a pricing strategy that supports your enterprise’s goals and objectives. Know your competition, and know the channel(s) and their characteristics.  Truly understand the benefits of the product/service and their related values for both the buying enterprise and their end users.  Most importantly, understand that pricing is NOT a standalone task, but a multi dimensional – interrelated function.

 In today’s tough economic times are your prices being forced down by cut-throat competition?  Do you know how to escape from a price war?

 RHL    4/6/10